Divis Labs tanks 9% after USFDA issues 6 observations to Vizag unit 2

Divis Laboratories share price plunged little more than 9 percent intraday Wednesday after its Vizag unit 2 has received six observations from the US health regulator.

After inspecting the plant during September 11-19, the US Food and Drug Administration has issued six observations including failure in testing individual batches and inadequate cleaning instructions, reports CNBC-TV18.

The USFDA pointed out that the company has failed to test individual batches of final API with conformity with all appropriate specifications and the lab failures have not been thoroughly investigated.

Among other observations, Divis failed to validate the manufacturing cleaning length of time and there are inadequate cleaning instructions for major equipment. Batch records are not always recorded, according to the regulator.

In previous three weeks, the stock had rallied more than 37 percent on hopes of getting clearance from USFDA for unit 2.

At 10:06 hours IST, the stock price was quoting at Rs 905.40, down Rs 56.30, or 5.85 percent on the BSE.